I want to see the TMC’s income streams from my programme to help me evaluate any conflicts but also to see if there are opportunities
opportunities. What happens if I change from airline A to airline B? I might get a better deal from airline B but does that mean the TMC is worse off on their incentives as airline B gives them less than airline A? Will my fees therefore need to go up?” he asks. “I don’t want transparency just so that we as buyers can criticise them [TMCs] or find out where they’ve got additional revenue – it’s not that. Our supplier decisions as corporates directly impact TMCs’ revenues and we don’t talk about this.” Do some less scrupulous TMCs try and influence buying behaviour? “TMCs can influence what content appears at the top of searches, that’s all I would say,” Park responds. “If an airline comes to them and says we need more business in the next quarter and we’ll give you an incentive if you can move market share, what are they going to do? Are they telling the corporate [about] their override in the OBT?” Park adds: “I absolutely have sympathy for TMCs at the moment and they add huge value to our programmes, but my point is that the commercial system is broken. The system needs to change because they have conflicting revenue streams.” Warner believes that travel management companies have not done a particularly good job of articulating their value proposition nor in giving the full picture of “all the variables that are now impacting the justifiable cost of managing travel”. He says: “The problem for TMCs is that, when they’ve been very opaque about revenue from suppliers and the GDS, when those revenues genuinely go away, it’s very difficult to go back to the customer and say, ‘you know that revenue we never told you about, well we now need you to cover it because it’s gone now’.” Referring to the new surcharges on Qantas bookings in Australia, Warner ponders whether it’s a development that could see some corporates rethink how they book and manage travel. “Three per cent on a business class fare from Sydney to Santiago, for example, is a lot of money and that’s in addition to a booking fee,” he say.
with point-of-sale in Australia, it would begin adding the surcharge in March. “This airfare surcharge will not apply to all airlines. Airlines that have maintained proportionate levels of support will be exempt from the airfare surcharge.” It is BTN Europe’s understanding that at present it will only be applied to Qantas bookings. Virginia Fitzpatrick, regional director Australia at Partnership Travel Consulting, addressed the surcharge in a recent LinkedIn post: “Unless the agency retained this right through the contract agreement to pass on these variations, then why should you the customer pay for changes to an industry that has happily retained them and in some cases not declared these additional benefits? And what about the big ‘what if’… what if other carriers start to follow?” She continued: “Surely the time has come for TMCs to sit down… develop an industry-wide statement forewarning and predicting the changes to come for their customers, and maybe the time has come for them to start looking [at] that corporate travel charging model? Dare I say it, a truly an open book discussion?”
THE QUEST FOR TRANSPARENCY
The Qantas development has put the wind in the sails of buyers calling for complete transparency of TMCs’ money flows, particularly regarding supplier revenues. While BCD Travel CEO John Snyder says the TMC’s revenue is around the 50/50 mark but moving towards the customer paying more, a Business Travel Association white paper published last year on the subject of remuneration models said that, on average, the association’s members receive a third of their income from corporates and two-thirds from the supply chain. Warner believes that for some TMCs it’s already more like 40 per cent supplier- derived and 60 per cent from customers. Travel manager Ben Park is squarely behind calls for transparency. “I want to see the [TMC’s] income streams from my programme to help [me] evaluate any conflicts, but also to see if there are
“Buyers are now paying more to continue using the TMC. Is there a tipping point where the customer says, ‘do I value the services of the TMC sufficiently to pay the extra that I’m now being asked to pay?’” He concludes: “I’m surprised that we’ve not seen more corporates [in Australia] talk about either assessing that value or deciding that they want to construct the programme going forward in a different manner. “I’d be surprised if there’s not a number of companies looking at breaking it all down and just consuming certain services or content from TMCs. Are we looking at some sort of revolution now?” This article was first published on businesstravelnewseurope.com in February 2023 as part of the Spotlight Series: Travel management companies report
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SPRING 2023 | businesstravelnewseurope.com
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